Tariffs May Complicate Efforts to Tame Inflation

“Federal Reserve officials are keeping close tabs on the tariffs the Trump administration announced Saturday, given the expectation that such policies could lead to higher prices, at least temporarily,” the New York Times reports.

“The central bank is especially wary after wrestling with a surge in prices following the pandemic. Inflation has eased back down toward the Fed’s 2 percent target after it raised interest rates aggressively in recent years and kept them at high levels, but central bankers remain alert to anything that could stall progress toward that goal.”

“The Fed has historically tended to look past or not react to changes in trade policy, considering them one-off adjustments in prices rather than potential sources of persistent inflation. Tariffs tend to dent growth in the longer run as well, as businesses retrench and consumers offset rising prices in certain goods by cutting back on spending in other areas.”

Washington Post: Here’s what could get more expensive with Trump’s new tariffs.

Wall Street Journal: The price hikes coming for these items may surprise you.